Airline Market Trends

Strategic
Implications

The Internet has empowered online travelers to have broader
control over vacation planning, airline market trends, and use technology to
assist them throughout the purchase process. This has given rise to meta-search
tools, online communities and other Web site features that simulate the
experience and knowledge of industry veterans at the point of sale. New and existing
Web-enabled customer support services will be imperative in order to broaden
and redefine the value of the Internet beyond low pricing and word-of-mouth
referrals.

While U.S. adults are spending more time online (often at the
expense of other media and purchase channels), use of the Internet channel is
not exclusive. The same is true in travel. Suppliers’ increasing penetration of
the online lei­sure market is the direct result of better inventory management
across both of their channels of distribution. This high­lights the importance
of offering and using both online and offline channels for customer service and
support such as airline market trends, partic­ularly as online buyers begin to
segment their channels of purchase by the type of travel component purchased.

Airline Market Trends

Now thoroughly integrated in our lives as: 1) a source for
information; 2) a means of communication; 3) a place to transact, and 4) a
venue for entertain­ment, the Internet functions as a portal for living. To
truly capitalize on the revenue opportunity and value of the Internet for
travel, market participants will need to view it in terms of these four
functions for travel in the future.

As the demographic profile of Internet users more closely
parallels that of the U.S. population, it is imperative to view the Internet as
another channel of travel distribution, rather than as a separate and distinct
market. This means adapting and targeting content, promo­tions and Web sites to
meet the needs of niche segments of the population such as the graying baby
boomers who are approaching their highest level of net worth, and members of
key ethnic groups (e.g., Hispanics, Asian-Americans) who are gaining affluence.

While the Internet continues to attract new buyers, the bulk of online
travel purchases stem from the habitual use of current online travel
purchasers. This underscores the importance of customer retention, repeat
purchasing and brand affinity to online profitability over the next few years.
Strategically, this means cross-selling other travel components to Web site
customers, as well as upselling online air buyers, for example, travel and
non-travel opportunities. As a result, the market will see introductions of
target-specific loyalty programs not only by suppliers but also intermediaries
(e.g., Expedia and Travelocity and airline market trends).